Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The company’s best-selling product is a three-by-four-foot, doublepaned operable window.

Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The company’s best-selling product is a three-by-four-foot, doublepaned operable window.

The Frame Division also can sell frames directly to custom home builders, who install the glass and hardware. The sales price for a frame is $80. The Glass Division sells its finished windows for $190. The markets for both frames and finished windows exhibit perfect competition.

The standard variable cost of the window is detailed as follows:

	Frame Division			Glass Division
Direct material	$	15		$	30	*
Direct labor		20			15
Variable overhead		30			30
Total	$	65		$	75

*Not including the transfer price for the frame.

Required:

1-a.	Assume that there is no excess capacity in the Frame Division. Use the general rule to compute the transfer price for window frames. (Omit the "$" sign in your response.)

Transfer price

$ 80

1-b.	Calculate the transfer price if it is based on standard variable cost with a 10 percent markup. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

		Transfer price	$ 71.50
2-a.	Assume that there is excess capacity in the Frame Division. Use the general rule to compute the transfer price for window frames. (Omit the "$" sign in your response.)

Transfer price

$ 65

2-c.	Suppose the predetermined fixed-overhead rate in the Frame Division is 125 percent of direct-labor cost. Calculate the transfer price if it is based on standard full cost plus a 10 percent markup. (Omit the "$" sign in your response.)

Transfer price

$ 99

2-d.	The Glass Division has been approached by the U.S. Army with a special order for 1,000 windows at $155.

(i)	Calculate the contribution per window in special order for Weathermaster Window Company. (Omit the "$" sign in your response.)

Contribution per window

$ 15

(ii)	From the perspective of Weathermaster Window Company as a whole, should the special order be accepted or rejected?
	Accepted

2-e.	Assume the transfer price established in part (2c).

(i)	Calculate the contribution per window in special order for Glass Division. (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)

Contribution per window

$ -19

(ii)	Will an autonomous Glass Division manager accept or reject the special order?
	Reject